An interesting item arguing that “A year into “Abenomics,” it was not supposed to be like this for the Bank of Japan”.

The BOJ’s near $70 billion a month spurt of QE has:

  • driven the yen down,
  • Tokyo stocks up,
  • ignited the strongest economic growth among G7 countries in the first half of the 2013
  • and halted the long fall in consumer prices

BUT … Financial markets are now looking for more, a second round of Japanese QE … dubbed JQE2:

  • Economic growth slowed sharply in the third quarter
  • While inflation is at its highest in five years, it is well short of the BOJ’s price target, with the outlook weakening (private economists and even BOJ board members are openly skeptical of the BOJ’s optimistic growth and price forecasts)

The BOJ is said to be running scenarios for a further round of easing, perhaps buying stock market-linked funds or other assets riskier than JGBs (the focus of the current round of QE) – but officials say further easing is not imminent.

There’s more at the Reuters article, here